As the Lib Dem leadership race enters the campaign proper and punters look more closely at the two candidates, the party - all political parties for that matter - need to look more seriously at an issue that none of them have yet addressed: the relationship between politicians, their parties and the betting markets.

In these early skirmishes between Clegg and Huhne the odds are staying resolutely in the former's favour and yet there is nothing stopping either candidate or their wealthy benefactors from shifting their odds down: to either widen the gap in Clegg's case or close it in Huhne's.

The ability to shift the betting markets in your own favour clearly has a more profound impact in political betting markets than say the greyhound market. In greyhound racing, the odds are incidental to the greyhound's performance. Mick the Miller never lost any sleep in his kennel before all his big races. But where political betting is concerned, the markets have a direct impact on the information received by voting members which can effect the result.

Political journalists write up candidates' chances of victory based on a number of obvious criteria: an intimate knowledge of the political scene; off the record chats with MPs and political aides; the support candidates generate from their own peers and so forth. But the front-runners are also partially determined by what the betting markets are telling them, and that will feed into the analysis that the media and voters make of candidates. In other words, voters will be influenced by media reports which are themselves partially influenced by the odds.

What's more, when betting markets shorten in favour of one candidate or another, it is a sign that not just Lib Dem members, but voters more widely, appreciate the virtues of the backed individual - and for a Lib Dem member signs of popular appeal are, naturally, attractive.

Around £100,000 has so far been wagered on the Lib Dem leadership battle. This is small fry compared to most betting markets: the Grand National for example attracts around £250m in bets on race day alone. So in the case of the third party's leadership contest, it's relatively easy to distort the market for anyone with a healthy cheque book and a determination for their man or woman to win. There are no rules governing who can and cannot bet on UK political elections so there is nothing to stop them doing precisely this. The perception of one candidate overtaking another, getting that all-important momentum, has the potential to swing undecided voters. It's as much about the immediate outcome of the change in odds as it is about the presentational opportunities of David catching Goliath.

Lib Dems talk frequently and correctly about the importance of principles in 21st century political life. Surely here is a situation where a principle is at stake. Each candidate can only spend £50,000 on their six week campaign - in theory ensuring an equality of spending power between camps. But there are no rules governing what wealthy benefactors or candidates can wager on their man or woman. The MPs' code of conduct calls on members to be honest, open and accountable. Whilst these rules do not cover party issues it could be argued that the status quo for party leadership elections runs counter to them.

The same can be said of parliamentary seats, particularly parliamentary byelection campaigns, which usually generate considerable media coverage. Allowing the integrity of an election to be buffeted by forces which could in theory distort the outcome is unacceptable. As I write this Chris Huhne would have to spend around just £1300 to get his odds on Betfair down to the same as those of Clegg. Of course it would require sustained and signifcant betting to keep the price low. But it's feasible. I'm not for a second suggesting that either he or Clegg have done so, nor intend to. But surely rules governing these things should be established to prevent the possibility of abuse during this or any future election?

An accord between the leadership hopefuls and their teams, stating categorically that none of them will financially back themselves would instil confidence in the market. There may be useful lessons to learn from the Sports Betting Code of Practice which was introduced in April 2006 to ensure propriety in the sports betting market. It would be quite possible for all three parties to draw up such a code and it would ensure that leadership elections are fought solely on issues of substance.